CHINA Law and Practice Contributed by: Tim Yimin Liu, Sybil Xueting Yuan and Cassie Wenjing Li, Global Law Office
tion institution or the arbitral tribunal, that have the power to issue enforceable interim orders. Notably, with the new amendments undergoing legis - lation review, China is undertaking major reforms (see 2.2 Changes to National Law ), which are expected to significantly narrow the gap between the PRC Arbitra - tion Law and the Model Law. 2.2 Changes to National Law On 30 April 2025, the Second Draft Amendment to the PRC Arbitration Law (the “Second Draft Amendment”) was reviewed by the 15th meeting of the Standing Committee of the 14th National People’s Congress. The Second Draft Amendment proposes substantive revisions to the current PRC Arbitration Law and is expected to become effective in 2026. Key highlights of the Second Draft Amendment are as follows. • Competence-competence – Grants the arbitral tribunal the power to rule on its own jurisdiction, whereas under the current PRC Arbitration Law, the validity of an arbitration agreement is deter - mined by either the arbitration institution or a competent court. • Interim measures – Introduces conduct preserva - tion measures (ie, order parties to do or refrain from doing certain acts) while maintaining the cur - rent preservation interim measures on assets and evidence. • Expanded scope of foreign-related arbitration – Broadens the current scope of “foreign-related” arbitration – previously limited to disputes involving foreign trade, transportation and maritime matters – to cover any dispute involving a foreign element. • Seat of arbitration – Formally introduces the con - cept of the “seat of arbitration” at the legislation level (applicable to foreign-related arbitration cases only). Parties may designate the seat in writing, which will determine procedural laws and judicial oversight. If the seat is not agreed, it may be deter - mined by the arbitral tribunal or by the rules of the arbitral institution. • Ad hoc arbitration (limited introduction) – Permits ad hoc arbitration on a limited basis, specifically in foreign-related maritime disputes and disputes
between enterprises registered in pilot Free Trade Zones (FTZs) that involve a foreign element. • Foreign arbitral institutions in FTZs – Explicitly per - mits foreign arbitral institutions to establish repre - sentative offices in Chinese FTZs and administer international commercial arbitration proceedings. • Legitimisation of international investment arbitra- tion – Confirms that Chinese arbitration institutions may administer international investment arbitration cases in accordance with international investment treaties and the procedural rules agreed upon by the parties. Under Chinese law, if an arbitration agreement satis - fies the formality and substance tests for validity, then it is generally enforceable. If one party initiates court proceedings without dis - closing to the court the existence of an arbitration agreement, the other party should promptly submit a valid arbitration agreement prior to the first court hearing and advocate for arbitration, upon which the court must review the arbitration agreement primarily for its validity, and, if valid, the court shall dismiss the litigation. Otherwise, the right to arbitration shall be deemed as waived (see Article 26 of the PRC Arbitra - tion Law). 3. The Arbitration Agreement 3.1 Enforceability Therefore, the enforceability of an arbitration agree - ment under PRC law is tied to its validity. For an arbi - tration agreement to be enforceable, it should meet certain formality and substance legal tests. • In writing – An arbitration agreement must be in writing (including contracts, letters, emails, tel - egrams, and any other written communication that contains an expression of intent to arbitrate). • Clear intent to arbitrate – The arbitration agreement must reflect the parties’ clear and mutual intent to submit disputes to arbitration. • Being arbitrable – The subject matter of the dis - pute must be arbitrable under Chinese law. Certain matters, such as administrative disputes, criminal issues, and marriage/family law, are not arbitrable.
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